Blue Gas Marine Charts Course to Disrupt Boating Fuels Market

Drivers complain about the ups and downs of gasoline prices, but they’ve got nothing on boaters. Marine fuel costs more, and boats burn through a lot more of it. While motorists measure their fuel efficiency in miles per gallon, boaters tally gas consumption in gallons per hour.

“It takes $200 worth of fuel just for fishing a couple of days on a 23-foot boat,” says entrepreneur and longtime boater Miguel Guerreiro.

Guerreiro’s efforts to ease his own marine fuel woes led him to launch a technology startup. Blue Gas Marine has developed a system that enables boats to run on natural gas, which is more energy efficient, cleaner burning, and, perhaps most important to boaters, much cheaper than gasoline. The Apex, NC-based company launched the product last year, and Guerreiro says he now fields inquiries from around the world.

Guerreiro started thinking about natural gas technologies about five years ago while he was working as an operations manager at the former Talecris Biotherapeutics in Research Triangle Park, NC. Boating was his hobby, and while Guerreiro plied the waters off of the North Carolina coast, he fumed over fuel costs. He explored different engines and engine modifications (earlier in his career, he worked as a NASA engineer). Along the way, he noticed that natural gas technology had found a place as a fuel alternative for some motor vehicle fleets. Finding no comparable system for boats, he decided to make one himself.

After Grifols (NASDAQ: GRFS) acquired Talecris in 2011, Guerreiro left the company and used his severance to found Blue Gas Marine. But developing a marine engine that runs on natural gas was not as simple as adopting the natural gas technology used in trucks and vans. Boat engines are cooled by water, not air, and they have no catalytic converters to process exhaust the way that motor vehicles do, Guerreiro explains. Marine engines also need to be able to handle more fuel because powering through water requires more energy than driving down the road.

Rather than designing a brand new engine, Guerreiro developed a system that augments a gasoline engine. This system converts a boat engine into a natural gas/gasoline hybrid, capable of operating in three modes: gasoline only, natural gas only, or a dual-fuel mode that combines the two fuels. While developing the technology, Guerreiro tried as much as possible to use parts that were already available, he says. Where marine or motor technology fell short, Blue Gas Marine developed its own solutions. For example, Guerreiro designed components that precisely manage switching between natural gas and gasoline.

Blue Gas Marine says its system can reduce a boater’s fuel costs by up to 70 percent, and lower fuel consumption by as much as 40 percent compared to gasoline. The company also claims its system can reduce air and water pollution by 70 percent. As a gas (and not a liquid), natural gas mixes with air better than gasoline droplets. That means it combusts more fully, which leads to less exhaust, Guerreiro explains. Natural gas leaves no smoke or odor, nor does it leave slicks in the water the way gasoline does.

Running the engines on “natural gas only” offers maximum fuel economy and is the lowest pollution option, he says. The dual-fuel mode allows boaters to retain some of gasoline’s performance. In addition to fueling propulsion engines, Blue Gas Marine’s system can also run the power generation engines that provide electricity while a vessel is docked. Although Guerreiro readily talks about his system’s cleantech bona fides, he acknowledges that most boaters are attracted to its money savings.

Natural gas is cheap because it’s plentiful. Fracking technology made much more natural gas available, breaking the link of that commodity’s price to crude oil, says Rick Sapienza, a clean transportation specialist at North Carolina State University’s NC Clean Energy Technology Center. The abundance of natural gas and its low price encourages broader use of the fuel. Electric utilities are leading the way, shifting their power generation mix from coal to natural gas, as the U.S. Energy Information Administration explains in its 2016 Annual Energy Outlook. Natural gas use is rising in all sectors, except residential consumption. Yet relatively little natural gas is used for transportation: it represents just 3 percent of U.S. transportation fuels, according to EIA data.

The EIA estimated retail gasoline prices would average $2.25 this summer; marine fuel typically costs $1 more per gallon than the gasoline available at gas stations, Guerreiro says. Though relatively low now, history shows that gas and diesel prices are very sensitive to fluctuations in the cost of crude oil, says Sapienza, who is familiar with Blue Gas Marine but has no connection to the company. By comparison, natural gas prices should be more stable. That’s because natural gas’s commodity cost—the price of the fuel without expenses such as taxes and distribution—makes up a much smaller part of the price at the pump compared to gasoline and diesel, he explains. According to EIA figures, the cost of crude oil makes up nearly half of the retail price of a gallon of gasoline or diesel. For the equivalent amount of natural gas, the commodity represents less than 25 percent of the fuel’s retail price.

Blue Gas Marine isn’t the first company to try natural gas as a marine fuel. GM Powertrain developed natural gas engines for boats about five years ago, Sapienza says. That company targeted performance boating but found … Next Page »